How to Win The Bidding War on a House

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Real Estate

 

Good morning, friends. Welcome back to the channel. I hope you are doing well. I'm Nagaraj Annaiah, your trusted Bay Area tech realtor. I understand how important a home is to you and your family. I want to help you win bidding wars and find the house of your dreams. In this episode, I will share 10 ways to buy a home and win the bidding wars. With ten homes sold in fewer than three months, I know how to close deals, and I will let you in on the secrets.

 

To begin with, let's review the latest real estate headlines from last week. Head straight to the chapter if you want to get to the main story. Comment below and let me know what you want to hear next from me. nagarajhomes.com has a free mortgage calculator to help you with your purchase, and you can sign up for my monthly newsletter. You can also listen to my weekly radio show on Bolly 92.3, Bay Area's very own Bollywood station, every Sunday between 1230pm and 1pm. If you miss it, you can always hear me on Stitcher, Amazon Music, or Spotify.  

 

REALTY NEWS OF THE WEEK

  • Palo Alto found a way to protect dozens of homes from being torn down and subdivided. About 130 homes could be put into historic registries to keep homeowners from splitting lots under SB9. Incidentally, the 130 properties make up less than 1% of the total number of single-family homes in the city. The city's mayor says historic preservation was "deliberately" included in the law to preserve historic homes. Good for you, Palo Alto.
  • Affordable housing development in San Jose edges closer to construction. We are talking about 99 affordable homes at 555 Keyes St, at a cost of $83.6 million near Happy Hollow Park & Zoo.
  • More Black, Latino Californians have been priced out of the housing market. According to a report by the California Association of Realtors, only 26% of California households earned the minimum annual income of $144,400 needed to afford the monthly payments of a home priced at $786,750. 34% of white households in the state could afford a median-priced home, down from 38% in 2020. And 40% of Asian homebuyers could afford the median-priced home last year, down from 43% in 2020. Affordability will decline in 2022 if mortgage payments rise faster than income.
  • One of San Francisco's iconic Painted Ladies on Alamo Square could be yours for $5.75M. 722 Steiner St. is where the action is.  The building is a historic landmark and an iconic Victorian symbol. Are you in?
  • A three-bedroom, three-bathroom California home, which is built entirely of timber, is pegged as an entertainer's dream. Welcome to Trapeze house, where you can 'swing like Tarzan' if you have $1.2M. What’s more, you can rope swing from one room to another. Walk the bridges to your master suite or guest bedroom. Nestled in the hills of Lakeport, next to Clear Lake and a couple of hours from Sacramento, the residence resembles a scene out of a Disney film, and boasts an open floor plan with second-floor balconies. Spanning more than 3,700 square feet, the jungle-themed home features a den and a bar with 36-foot-high ceilings and heated concrete flooring. It’s quite a fabulous piece of real estate to own.
  • Santa Clara wants to be carbon neutral by 2045, and is proposing several policies to prevent greenhouse gas emissions in the next two decades. The Climate Action Plan will be updated to bring down greenhouse gas emissions by 80% by 2035 and make the city go carbon neutral by 2045. A carbon-neutral data center and reducing food waste is part of the plan, along with establishing electric vehicle infrastructure and teleworking options to reduce commute trips.

BIG STORY

How to win the bidding war and buy a home

It's time to get creative. Buyers are getting more desperate, and with the supply of homes for sale at a new low, homes that have been on the market for more than a week may be good candidates for an offer. Here is where realtors like me can advise you on how to put in offers before homes are even listed, to make offers go unseen, and to take other steps that could help you seal the deal in this unpredictable market. Here are some effective strategies I have used to sell ten homes in less than three months, in highly competitive areas like City of Tracy, Mountain House, River Islands, Santa Clara, and Alameda County. 

 

  1. Look below budget

Now take a breath and listen to me with an open mind. In a highly competitive market, it's best to look for a house that is $50,000 to $100,000 below your budget. What do I mean? Well, with this approach you can pay more than the buyer is asking for, and seal the deal. When things get tough, it is time to think outside the box!

 

  1. Escalation clause

Get wiser and use an escalation clause. This will help you increase your bid if there is an offer higher than yours.

 

  1. All cash

This is one of the best strategies and I have done a separate video just on this. You should watch it to know more. 

 

  1. Pay an advance

Fork out 1-3% of the advance, also called 'earnest money', the moment the seller accepts your offer. This deposit helps in closing the deal faster. Sometimes, I even go for 5-6% as earnest money.

 

  1. Waive all contingencies

This can be a bit dicey, but definitely a strategy to consider if you are sure about the house you are buying. Just waive the inspection, financing, and even the appraisal contingencies, and the seller might be more keen to do the deal with you.

 

  1. It's all about timing

In a competitive market like the Bay Area, things can happen so fast that it's best to win the bidding war even before it begins. But how do you do that? Simple. Never offer below the asking price, because your chances are slim and you might lose the war before it begins. House tour should happen the moment it's listed, and even be ready to make the deal without seeing the house. Sometimes, it's best to wait for the offer review date, and at other times, it's best to submit your offer before the review date. Here is where realtors like me can help you choose the right way to approach this situation, as timing is crucial here.  

 

  1. Get to know the listing agent

Again, realtors like me can come in quite handy here. It's important to have a great rapport with the listing agent, so you can make an offer that the seller cannot refuse. This personal connection has won me many deals in the past.

 

  1. Look for overlooked houses

Sometimes, it pays to be patient and look for houses that have been on the market for at least 10 days with no offers. It could mean that the asking price is too high, so you could quote below the price and win the deal, or perhaps the seller is not savvy enough in marketing their house. Either way, you have better chances in such a situation in a market where 45% of homes are sold within a week of hitting the market. The added advantage to this strategy? You could keep all the contingencies. 

 

  1. Work with an understanding lender

If lenders are available when you need them in a time-sensitive situation like this, it makes all the difference in sealing deals. Here is where my relationship with lenders can help you win over the seller in no time. As a local certified mortgage agent, I will build trust and ease the seller's mind, to make sure that the deal goes through. 

 

And my 10th tip? Watch till the end of this video. You will need it.

 

CONCLUSION

Last week, mortgage rates were at their highest levels since late 2018, with top tier conventional 30yr fixed scenarios being quoted 4.75% by the average lender and settling down to 4.71% by Friday. While things keep going up and down, it's best to assume that rates will keep going up. What does this mean? If you have the money, buy it now.

 

If you have watched my video so far, I would love it if you left a message saying, "Seal the Deal".

 

Okay, here’s my 10th tip. If you have lost a bid despite following the steps I outlined, stop. Don't continue bidding on that property. That's just a waste of time and money. Instead, look for another one. Buying houses is a marathon, not a sprint. You have to pick yourself up and run again. Sooner or later, your perseverance will pay. Just don't give up midway. If you're a seller wondering whether you should sell now or wait it out, check out last week's video. Until next week, relax, take a breath, and let me do all the work for you as your realtor! Buying or selling a home, I am your Jeeves!